Giving away the store may not be the best answer to surviving these desperate times. Free Grand Slams may have driven 2.2 million people into Denny’s, but will that effort show a real return on investment? When you factor in the cost of advertising, labor and product, what is the long-term effect? It had super public-relations value, no doubt. But was the company in a position to take full advantage of the opportunity? Quiznos appeared to do more harm than good with its big giveaway. Now IHOP is jumping on the bandwagon. Before you follow these marketing lemmings off the side of the cliff, there are some important elements to consider.
Increased foot traffic doesn’t automatically translate into increased sales. When considering these types of “blowout” promotions, be sure to first consider what your objective is. Generally, if you’re going to go to this extreme, it should be to introduce or reintroduce your business to the community. You want to promote “trial.” That said, just getting people in the front door is only part of the battle. What you do once they’re in your seats, eating your food, is critical. You need to think ahead about what is going to bring them back after you get them in.
Be prepared. Anticipate a large turnout and make sure you have plenty of product and labor. When you start turning people away because you’ve run out of the promoted item, you’ll create just the opposite effect of what you intended. People will wait endlessly in line for these crazy promotions, but when you run out of food, you’ll never be forgiven.
Blow out a mainstream item. You’re only going to get one chance to make a positive impression with a lot of people in a short period of time. So give away one of your signature items. Don’t cheapen it to save money. Present your best, full-sized, fully loaded item. This is your chance to hook ’em. If it’s pizza, blow out the one with all the toppings, not just plain cheese. Denny’s followed this principle just right. They focused on their signature Grand Slam breakfast. All of their other items were still at regular price. If you’ve got a signature entrée, that’s the one you give away.
Bounce back. Provide every freebie seeker with a “bounce back” certificate that motivates them to return to your restaurant for another visit within a week or two under more normal circumstances. Use an offer that is strong, but not too strong. “Buy one, get one” offers usually work fine for this kind of bounce back. Now they’re more likely to become a regular customer, not just a deal seeker.
Capture. Now that you have people coming to your restaurant in droves, capture their names, addresses, phone numbers and e-mail addresses. You can use a fish bowl drawing to get the info or consider using an outside service that not only helps you capture the information, but provides an easy and inexpensive way to leverage it.
Follow up. Now that you have this database, start working it. Send out postcard or e-mail offers. Test a small percentage of the list with different deals to see what brings them back.
Continue your promotional efforts. Now that you’ve gotten a kick start, continue doing local marketing promotions. Try to generate one low-cost promotion in your trading area per week. Keep the momentum going with promotions that cost little to implement, but drive in new customers.
Don’t destroy your regular-price credibility. Though times are tough, resist the temptation to roll out the coupons. Too much couponing through mass media and mail will condition your customers to wait for the deals. Rather, use your cross promotions to provide the discounts, because they’re not available to the general public.
Profit from nonprofits. Fund raising also is taking a big hit during this economic meltdown. Be a hometown hero by partnering with a local, high-visibility nonprofit organization. Let them promote for you and bring in more customers. They can distribute special certificates throughout the community that, instead of a discount, provide donations to their cause when redeemed. As long as the donation is performance-based, you’re at no risk. Treat the good will and exposure as extra credit. Your goal in these arrangements is to drive buying customers through the front door.
There’s no doubt that these are desperate times. You’ll need to pull out all the stops to survive this mess, and you’ll have to be smart as you do it.